The relevance of the OECD and UN Model Conventions and their Commentariesfor the interpretation of Croatian tax treaties

Since Croatia gained its independence in 1991, forty-nine new tax treaties havebeen concluded, forty-four of which are in force and effective. In addition,there are four treaties that were taken over by succession from the formerYugoslavia which are still in force and effective. These are the treaties withFinland, Norway, Sweden and the UK.

All of these treaties generally follow the OECD Model Tax Convention on Incomeand on Capital (OECD Model) but sometimes also include some of the provisionsfrom the United Nations Model Double Taxation Convention between Developed andDeveloping Countries (UN Model), as described below. However, during the pasttwo decades, being a young country with a changing and evolving tax system,Croatia has not had a clear tax treaty policy. As a result, the Croatian taxtreaties are not always consistent.

Similarly, when it comes to treaty interpretation, a lack of experience andpractice has led to different interpretations in similar cases even from thesame authorities.

Although it is hard to evaluate one country’s practice when there is notsufficient case law, administrative practice or even scholarly opinions, it canbe claimed with a great deal of confidence that the Croatian tax authorities dofollow, or at least have the intention of following, the OECD Commentary as amain means of interpretation of tax treaties.